Gold & Silver Daily

Ed's Critical Reads

Dec 19, 2014

U.S. regulators label MetLife as potential financial threat

U.S. regulators have labeled insurer MetLife as a potential threat to the financial system, a designation that brings stricter government oversight.

MetLife said Thursday that the Financial Stability Oversight Council has designated the company as "systemically important." As a result, MetLife must increase its cushion of capital against losses, limit its use of borrowed money and submit to inspections by examiners. MetLife will come under the supervision of the Federal Reserve. Its primary regulator now is New York state.

Regulators saw a need for closer oversight of big financial companies that aren't banks after the near-collapse of insurer American International Group threatened to bring down the global system in September 2008 during the crisis. The idea is to prevent a catastrophic collapse that could lead to another financial meltdown.

New York-based MetLife is the largest U.S. life insurer, with about $475 billion in assets under management.

This AP story, filed from Washington, appeared on the Internet site on Thursday afternoon EST---and today's first news item is courtesy of West Virginia reader Elliot Simon.

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Fed calls time on $5.7 trillion of emerging market dollar debt

The U.S. Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire.

They have collectively borrowed $5.7 trillion in U.S. dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.

Much of the debt was taken out at real interest rates of 1pc on the implicit assumption that the Fed would continue to flood the world with liquidity for years to come. The borrowers are "short dollars", in trading parlance. They now face the margin call from Hell as the global monetary hegemon pivots.

The Fed dashed all lingering hopes for leniency on Wednesday. The pledge to keep uber-stimulus for a "considerable time" has gone, and so has the market's security blanket, or the Fed Put as it is called. Such tweaks of language have multiplied potency in a world of zero rates.

This commentary from Ambrose Evans-Pritchard showed up on the Internet site at 9:27 p.m. GMT on Wednesday evening---and falls into the must read category.  I thank Roy Stephens for his first offering in today's column.

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Psaki misspoke: Obama not yet signed new anti-Russian bill

U.S. President Barack Obama has not yet signed a bill clearing the way for more economic sanctions against Russia. The U.S. State Department confirmed Jen Psaki misspoke during the press briefing.

The bill was expected to be signed “by the end of the week,” according to White House press secretary Josh Earnest’s statement in Tuesday. U.S. State Department spokesperson Jen Psaki claimed on Wednesday that the bill was already signed.

“He signed it yesterday,” Psaki stated during the briefing, interrupting Russia Today’s Gayane Chichakyan who was asking a question about the bill dubbed Ukraine Freedom Support Act of 2014.

However, according to representatives of the White House “the President has not yet signed this legislation.”

This article put in an appearance on the Russia Today website at 9:44 p.m. Moscow time on their Wednesday evening, which was 1:44 p.m. in New York.

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Russian economic meltdown sparks wave of panic buying London homes

Wealthy Russians, desperate to get their money out of Moscow in the wake of the Russian economic crisis, are panic-buying in London this week, according to high-end estate agents.

Russia has lost control of its economy in the last few days after an interest rate hike by the central bank failed to stem the collapse of the rouble, accelerating the trend of Russian buyers in the UK capital.

Beauchamp Estates said it has seen as much as a 10pc uptick in sales of luxury London homes to Russians since the rouble started to spiral a year ago.

"I currently have half a dozen Russian clients urgently looking to spend over £20m each on buying a new home in central London. For them the address must be Belgravia, Knightsbridge, Mayfair and Regents Park, it's got to be a prestigious postcode and ideally a park side or leafy address," said Gary Hersham, founder of Beauchamp Estates.

This real estate-related article was posted on The Telegraph website at 4:55 p.m. GMT on Wednesday afternoon---and I found it in yesterday's edition of the King Report.

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Russians Quit London Luxury Homes as Only Super-Rich Stay

Wealthy Russian home buyers are vanishing from London after driving a wave of foreign investment that lifted property prices to records. Only the oligarchs persist.

The number of Russians registered through Christie’s International Real Estate to buy homes in the city dropped by 70 percent in a year, said Giles Hannah, the broker’s senior vice president. That has led to a plunge in offers for properties priced at less than 10 million pounds ($16 million) as it becomes more difficult for all but the wealthiest to take money out of their home country.

“The banks are limiting what they can withdraw and we’re expecting further impact as sanctions kick in,” said Hannah, who advised Russian families on 180 million pounds of London property deals in the past two years. “The oligarchs are still spending. They already have banks or lawyers over here that allow them to make purchases.”

This Bloomberg article, filed from London, appeared on their Internet site at 4:04 a.m. Denver time on Thursday morning---and it's the second offering of the day from Elliot Simon.

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U.K. oil industry ‘close to collapse’ as price plunges below $60 per barrel

Britain’s oil industry is in a “crisis” and may be “close to collapse,” a senior oil industry expert has said, as the UK’s biggest oil and gas companies continue to cut staff and investment and the price of crude slumps.

Speaking to the BBC, Robin Allan, chairman of the independent explorers’ association Brindex, echoed warnings made by other figures in the oil industry in the past month, saying that no new projects in the North Sea would be profitable while oil is being traded at below $60 a barrel.

“It's almost impossible to make money at these oil prices,” Allan said.

“It's close to collapse,” he said. “In terms of new investments – there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone.”

This Russia Today piece, borrowed from a BBC article, showed up on their website at 12:31 p.m. Moscow time on their Thursday afternoon---and it's the second story today from Roy Stephens.  The folks over at Zero Hedge have spun this story with a headline that reads "It's A Huge Crisis" - The U.K. Oil Industry is "Close to Collapse, People Are Being Laid Off"---and it's courtesy of Manitoba reader U.M.

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E.U. bans investment in Crimea, targets oil sector, cruises

The European Union banned investment in Crimea on Thursday, halting European help for Russian Black Sea oil and gas exploration and outlawing European cruise ships from calling at Crimean ports.

The new measures, which E.U. governments have signed off on and will take effect on Saturday, reinforce the E.U.'s policy of not recognizing Moscow's annexation of Ukraine's Crimea region in March.

E.U. leaders, who meet in Brussels later on Thursday, will pledge to keep up pressure on Russia over its role in Ukraine despite Russia's currency crisis and ailing economy, diplomats said.

The E.U. is outlawing investment in Crimea, preventing Europeans and E.U.-based companies from buying real estate or companies in Crimea or financing Crimean companies, the bloc said in a statement.

This Reuters article, filed from Brussels, appeared on their Internet site at 12:22 p.m. EST on Thursday---and it's the second contribution of the day from reader U.M.

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E.U. Leaders Refuse to Strengthen Sanctions Against Russia: Hollande

E.U. leaders have not made a decision on new sanctions against Russia, and easing of those currently imposed will depend on the situation in Ukraine, French President Francois Hollande stated.

"There were no new sanctions, because they should not be. Easing of sanctions will depend on our affirmation of progress," Hollande told journalists after the E.U. summit in Brussels.

On Thursday, a European diplomat told RIA Novosti that at the summit in Brussels, E.U. heads could discuss reducing sanctions imposed on Russia.

This news item, filed from Brussels, appeared on the Internet site at 2:18 a.m. Moscow time on their Friday morning---and I thank reader M.A. for sending it to me just before I hit the send button on today's column.

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Swiss Central Bank Plunges Into NIRP, Sends Deposit Rates Negative, Scrambles Against Safe-Haven Capital Flight

Everyone thought that any major monetary policy surprises and/or capital controls today would come from Putin during his annual press conference. Boy were they wrong: just after 2 a.m. Eastern, none other than the Swiss National Bank joined the ranks of the ECB in scrambling to stem the wave of capital flight, not to mention the cost of money, when it announced it too would start charging customers for the privilege of holding cash in its banks, when it revealed a negative, -0.25% interest rate on sight deposits: a step which according to the SNB was critical in maintaining the 1.20 EURCHF floor.

The factors from the "past few days" in question that the SNB was envisioning to justify becoming the latest entrant to the NIRP monetary twilight zone: Russian capital flight. Per Bloomberg, "the SNB move follows Russia’s surprise interest-rate increase this week and hints at the investment pressures that resulted after that decision failed to stem a run on the ruble. Swiss officials acted as the turmoil, along with the imminent threat of quantitative easing from the ECB, kept the franc too close to its 1.20 per euro ceiling for comfort."

“This is not the magic bullet, but will buy them time,” said Peter Rosenstreich, head of market strategy at Swissquote in Gland, Switzerland. “This will relieve pressure from the floor in the short term, but not in the long term.”

This interesting story showed up on the Zero Hedge website at 9:43 a.m. EST yesterday---and it's courtesy of reader M.A.

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Nine charts showing why Greece has to leave the euro

Greeks are heading to the polls again. Prime Minister Antonis Samaras has called a snap election to appoint the country's new head of state. Despite only being a symbolic role, the vote for a new president has sent nerves jangling across the eurozone once again.

With the first of a round of three votes completed, the fate of the current moderate centre-right coalition government hangs in the balance. Waiting in the wings is the radical hard-Left Syriza, who have promised to defy the country's bailout terms and whose election could trigger financial panic at the prospect of a 'Grexit' once again.

Syriza leader Alexis Tsipras says he does not want Greece to leave the euro, but after €245bn (£193bn) in loans and bailouts from the Troika, and one near-debt default later, here are the numbers that show why Greece can't remain in the single currency any longer.

This longish, but very interesting news item was posted on The Telegraph's website at 11:30 a.m. GMT yesterday morning---and it's courtesy of Harry Grant.

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Highlights of Putin's Big Annual Press Conference 2014

Russian President Vladimir Putin held the tenth annual press conference earlier today. During the session, Putin discussed important issues that Russia is currently facing: the situation in Ukraine, the fall of the ruble and economic problems, as well as intensifying relations with the West.

This longish, but very worthwhile read put in an appearance on the Internet site at 3:20 p.m. Moscow time on their Thursday afternoon, which was 7:20 a.m. EST.  Reader M.A. was the first person through the door with this story early yesterday morning.

Other stories on this were from Zero Hedge---Putin Defiant, Lashes Out At West, Tells Russians Economy May Stay Weak For Two Years---courtesy of Dan Lazicki.  Also this piece from The Telegraph---Russia will emerge from crisis within two years, says Putin---thanks to Roy Stephens.  And this article from the Russia Today website headlined "Western nations want to chain 'the Russian bear' - Putin"---also thanks to Roy Stephens.

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Pepe Escobar: What Putin is not telling us

Even facing what under any circumstances is a perfect storm; President Putin delivered an extremely measured performance at his annual press conference and Q&A marathon.

The perfect storm evolves in two fronts; an overt economic war – as in siege by sanctions - and a concerted, covert, shadow attack to the heart of the Russian economy. Washington’s endgame is clear: impoverish and defang the adversary and force him to meekly bow to the ‘Empire of Chaos’s’ whims. And bragging about it all the way to “victory.”

The problem is Moscow happens to have impeccably deciphered the game – even before Putin, at the Valdai Club in October, pinned down the Obama doctrine as “our Western partners” working as practitioners of the “theory of controlled chaos.”

This commentary by Pepe easily falls into the absolute must read category---and it was posted on the Russia Today website at 3:25 p.m. Moscow time on their Thursday afternoon---and the first reader through the door with this was Roy Stephens, for which I thank him.

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Free Fall of the Ruble: A brilliant ploy of Russian economic Wizards? Who’s chess game? -- Peter Koenig

The world is still hell-bent for hydrocarbon-based energy. Russia is the world’s largest producer of energy. Russia has recently announced that in the future she will no longer trade energy in US dollars, but in rubles and currencies of the trading partners. In fact, this rule will apply to all trading. Russia and China are detaching their economies from that of the West. To confirm this decision, in July 2014 Russia’s Gazprom concluded a 400 billion gas deal with China, and in November this year they signed an additional slightly smaller contract – all to be nominated in rubles and yuan.

The remaining BRICS – Brazil, India and South Africa – plus the members of the Shanghai Cooperation Organization (SCO) – China, Russia, Kazakhstan, Tajikistan, Kirgizstan, Uzbekistan and considered for membership since September 2014 are also India, Pakistan, Afghanistan, Iran and Mongolia, with Turkey also waiting in the wings – will also trade in their local currencies, detached from the dollar-based western casino scheme. A host of other nations increasingly weary of the decay of the western financial system which they are locked into are just waiting for a new monetary scheme to emerge. So far their governments may have been afraid of the emperor’s wrath – but gradually they are seeing the light. They are sensing the sham and weakness behind Obama’s boisterous noise. They don’t want to be sucked into the black hole, when the casino goes down the drain.

To punish Russia for Ukraine, Obama is about to sign into law major new sanctions against Russia, following Congress’s unanimous passing of a recent motion to this effect. – That is what the MSM would like you to believe. It is amazing that ten months after the Washington instigated Maidan slaughter and coup where a Washington selected Nazi Government was put in place, the MSM still lies high about the origins of this government and the massacres it is committing in the eastern Ukraine Donbass area.

Congress’s unanimity - what Congress and what unanimity? – Out of 425 lawmakers, only 3 were present for the vote. The others may have already taken off for their year-end recess, or simply were ‘ashamed’ or rather afraid to object to the bill. As a matter of fact, of the three who were present to vote, two at first objected. Only after a bit of arm-twisting and what not, they were willing to say yes. This is how the ‘unanimous’ vote came to be, as trumpeted by the MSM – unanimous by three votes! The public at large is duped again into believing what is not.

This very interesting commentary appeared on the Internet site yesterday---and I thank reader 'David in California' for passing it around just after midnight MST.

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The largest vessel the world has ever seen

Climbing onto the largest vessel the world has ever seen brings you into a realm where everything is on a bewilderingly vast scale and ambition knows no bounds.

Prelude is a staggering 488m long and the best way to grasp what this means is by comparison with something more familiar.

Four football pitches placed end-to-end would not quite match this vessel's length - and if you could lay the 301m of the Eiffel Tower alongside it, or the 443m of the Empire State Building, they wouldn't do so either.

In terms of sheer volume, Prelude is mind-boggling too: if you took six of the world's largest aircraft carriers, and measured the total amount of water they displaced, that would just about be the same as with this one gigantic vessel.

Under construction for the energy giant Shell, the dimensions of the platform are striking in their own right - but also as evidence of the sheer determination of the oil and gas industry to open up new sources of fuel.

Wow!  I was impressed---and I'm not impressed easily.  This amazing article appeared on the Internet site on Tuesday sometime---and it's courtesy of South African reader B.V.  I hope, for Shell's sake, that it doesn't turn into a white elephant even before it's finished.

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Nearly 10,000 'cash-for-gold' violations found in six cities across N.J., officials say

About 70 “cash-for-gold” businesses in six cities across New Jersey have received a combined total of nearly 10,000 civil citations for allegedly violating consumer protection laws, officials announced today.

After undercover operations and unannounced inspections, authorities have cited 71 jewelry stores, pawn shops and other businesses in Newark, Paterson, Camden, Irvington, Trenton and Teaneck for various violations.

Each violation carries a fine ranging from $500 to $1,000.

“My message to the stores would be to follow the law,” said Steve Lee, acting director of the New Jersey Division of Consumer Affairs, said today during a press conference in Newark.

This gold-related story put in an appearance on the Internet site at 1:10 p.m. EST yesterday---and I thank Casey Research's own Jeff Clark for digging it up for us.

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Gold Rebounds From Two-Week Low on Signs of Swiss, China Demand

Spot gold rebounded from a two-week low amid signs of rising physical demand for the metal.

Swiss gold exports climbed to the highest this year, and flows from the U.K. suggest Swiss refineries are working at full capacity to meet demand from Asia, UBS Group AG said in a note today. Trading of the Shanghai Gold Exchange’s benchmark bullion spot contract advanced to the highest since April 2013.

“Physical demand was healthy,” David Govett, head of precious metals at Marex Spectron Group, said in an e-mailed note. “This will keep a floor under gold for the rest of the month.”

This Bloomberg article, co-filed from London and New York, showed up on their website at 12:26 p.m. MST on Thursday---and I thank Ken Hurt for sending it our way.

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Swiss gold exports to China fall to 34 tonnes in November

Switzerland exported 232.2 tonnes of gold in November, according to official Swiss Customs Administration statistics, an increase of 16 percent on the October total and the highest volume this year.

Of those exports, 34.7 tonnes of gold, including gold plated with platinum, in unwrought forms or for non-monetary purposes, was exported to China, down from 42.5 tonnes in the previous month.

Swiss statistics are a good indicator of the volume of metal being shipped into China, which does not publish official figures gold imports.

This very interesting article showed up on the Internet site at 11:49 a.m. GMT yesterday---and it definitely worth reading.   I thank reader U.M. for sharing it with us.

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In Serbia's remote east, ancient 'gold rivers' still offer hope

Since ancient times the "gold rivers" of a rural corner of eastern Serbia have drawn prospectors hoping to strike it rich by teasing the precious metal from the area's waterways.

The mountainous, heavily forested region today is poor and depopulated, but a tiny community of panners still eke out a living by coaxing gold flakes -- and the occasional nugget -- from the brisk waters flowing to the Danube River.

"Gold, it's all around here and very good quality at 22 karats," said prospector Nebojsa Trailovic, 59, smiling broadly as he showed off some yellow flecks he had just panned from the Todorova Reka river.

"But it takes lots of work, seven or eight hours per day, your hands in cold water, to extract between 10 and 12 euros ($12 to $15) , about a half gram," said Trailovic.

This AFP story, filed from Debeli Lug in Serbia, showed up on the Internet site at 7:45 a.m. Europe time this morning---and my thanks go out to South African reader B.V. for sending it to me in the wee hours of this morning MST.

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Indian dealers offer gold discount for first time in five months

Gold importers are offering a discount of $2 an ounce versus London prices for the first time in almost five months due to market oversupply.

Importers generally charge a premium over London prices but demand in the world's second-biggest gold consumer is expected to fall sharply this month after shipments surged in the past three months.

"Supply is in excess but demand is very weak because there are no weddings and festivals until mid January. The overall sentiment is weak," said Prithviraj Kothari, executive director of India Bullion & Jewellers' Association.

The south Asian country imported 151.6 tonnes of gold in November, up nearly 38 percent from October, as traders bought aggressively expecting curbs on overseas purchases.

This Reuters news item, filed from Mumbai, appeared on their website at 6:11 p.m. IST yesterday evening---and it's the final offering of the day from Manitoba reader U.M.---for which I thank her.

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Lawrence Williams: Is Russia really on the ropes -- Could it sell its gold?

The problem with most of those delighting in Russia’s apparent comeuppance for what the West views as its expansionary destabilising tactics in Crimea and Donbass is that they aren’t Russian.  They assume Russians will act like Americans or western Europeans to a financial crisis and come rushing back, cap in hand, to beg forgiveness, return Crimea to its Ukrainian masters and withdraw any troops it may, or may not,  have in Donbass.  They should perhaps listen instead to Sergey Lavrov, the highly plausible and cultured Russian Foreign Minister who comments that Russia has survived such adversities in the past, and come out stronger as a result.

Yes, Lavrov is talking to his, and his masters’,  own political book but he also has a point.  Look at President Putin’s domestic popularity ratings.  They are riding at levels any western politician would give his or her eye teeth for.  Russians are a proud people who feel they were taken to the cleaners by the West pre-Putin during the break-up of the Soviet Union and now have a strong leader in charge who is putting Russia back on the map as a world power.

Russia is not a rich nation by any standards.  True there are some exorbitantly rich individuals and a growing middle class but the bulk of the population remains very poor by Western standards and feels it has nothing to lose anyway.  Those featuring in the Western media as suffering horrendously because their low interest dollar loans may now drive them into bankruptcy as the ruble dives against the dollar are but a minute fraction of the population.  The huge majority of Russians don’t have mortgages or dollar loans and while resultant inflation may eat into what little they do have, as Lavrov points out, they’ve been there before and come out stronger.

This very well written article by Lawrie was something he sent me just before I filed yesterday's column in the wee hours of Thursday morning, but I was so jammed for time that I told him it had to wait for today---and here it is.  It's definitely worth your while.

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Dec 18, 2014

Meet your newest legislator -- Citigroup

Citigroup is the Wall Street mega-bank that forced the repeal of the Glass-Steagall Act in 1999; blew itself up as a result of the repeal in 2008; was propped back up with the largest taxpayer bailout in the history of the world even though it was insolvent and didn't qualify for a bailout; has now written its own legislation to deregulate itself; got the president of the United States to lobby for its passage; and received an up vote from both houses of Congress in less than a week.

And there is one more thing you should know at the outset about Citigroup: It didn't just have a hand in bringing the country to its knees in 2008; it was a key participant in the 1929 collapse under the moniker National City Bank. Both the U.S. Senate's investigation of the collapse of the financial system in 1929 and the Financial Crisis Inquiry Commission that investigated the 2008 collapse cited this bank as a key culprit.

The FCIC wrote:  “…we do not accept the view that regulators lacked the power to protect the financial system. They had ample power in many arenas and they chose not to use it. To give just three examples: the Securities and Exchange Commission could have required more capital and halted risky practices at the big investment banks. It did not. The Federal Reserve Bank of New York and other regulators could have clamped down on Citigroup’s excesses in the run-up to the crisis. They did not. Policy makers and regulators could have stopped the runaway mortgage securitization train. They did not…Too often, they lacked the political will – in a political and ideological environment that constrained it – as well as the fortitude to critically challenge the institutions and the entire system they were entrusted to oversee.

This longish, but very interesting commentary appeared on the Internet site on Tuesday---and I found it in a GATA release yesterday.

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Jim Rickards: Fed Will Implement QE4 in Early 2016

On today’s “The Roundup,” James Rickards, author of “Currency Wars,” Bloomberg's Trish Regan, Lisa Abramowicz and Douglas Lavanture break down some of the day’s top market stories on “Street Smart.”  The most interesting part is in the first 5:20 minutes---and you can skip the rest if you wish to.  I thank Harold Jacobsen for sending this.

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WTI Crude Spikes Over $59, Up 9% From Lows: Biggest Intraday Swing Since April 2009

Lifting WTI over $59 and Brent over $63. In fact, the $9 surge from the lows is the biggest move in crude since April 2009!

As Bloomberg reports, Russia Government Supported Ruble Ahead of Putin Conference.

"They want to reduce volatility and strengthen the ruble, and they are preparing the ground for Putin’s speech tomorrow,” Per Hammarlund, the chief emerging- markets strategist at Skandinaviska Enskilda Banken AB, says by e-mail today.

“It’s the ruble’s ‘P-Day.’”

President Vladimir Putin will hold an annual media conference tomorrow.

The media conference begins at noon Moscow time on Thursday, which is 4 a.m. EST this morning in New York, so it will be over by the time that North America wakes up today.  This Zero Hedge story, with some excellent charts, appeared on their website at 12:02 p.m. EST on Wednesday---and I thank Dan Lazicki for sharing it with us.

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British PM Cameron: Russia not fit to be part of international financial system

The combined effect produced by Western sanctions and low oil prices proves that there’s no place for Russia in the international financial system, believes British prime minister David Cameron, urging for more pressure on Moscow.

“We should stand up very firmly against the Russian aggression that’s taking place,” Cameron said before the Parliament on Wednesday.

The PM reminded that it’s the U.K., which “led the way in Europe in making sure there were sanctions” imposed against Russia over its 'annexation' of Crimea in March and Moscow’s alleged involvement in the Ukrainian crisis.

“And what the combination of the lower oil price and the sanctions are showing that I think it isn’t possible for Russia to be part of the international financial system, but try and opt out of the rules-based international legal system,” Cameron said.

Can you believe this guy?  How does a leader of a country get away with saying crap like this?  This article was posted on the Russia Today website at ten minutes to midnight on Wednesday evening Moscow time, which was 3:50 p.m. in New York.  I thank Roy Stephens for his first contribution to today's column.

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Russians training on Mistral warship ‘to leave France’

Some 400 Russian sailors training on a Mistral-class warship France controversially built for their navy will be returning home for an unspecified amount of time, the ship’s French builder has said.

"I can confirm that the Russian sailors will return (to Russia) before the end of year," a spokesman for shipbuilder DCNS told AFP news agency on Wednesday.

The spokesman did not give a date for the sailors' departure and could not say whether they would return to the port city of Saint-Nazaire, where the ship was built.

The sailors have been training since June on board the “Vladivostok”, one of two Mistral-class helicopter carriers destined for the Russian navy according to the terms of a €1.2 billion ($1.58 billion) deal signed in 2011.

This news item showed up on the Internet site yesterday sometime---and I thank South African reader B.V. for sending it our way.

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Russia Tries Emergency Steps for Second Day to Stem Ruble Plunge

Russian authorities eased accounting rules to curb banks’ need for dollars, seeking to ease concern the ruble’s plunge will lead to a full-blown financial crisis.

The ruble and stocks rallied after the Bank of Russia announced the measures. They came a day after the central bank’s 1 a.m. interest-rate increase and a free-fall of as much as 19 percent in the currency, prompting speculation of a potential meltdown in emerging markets.

The package of measures allows banks to use the third-quarter exchange rate in valuing risk-weighted assets and imposes a moratorium on mark-to-market accounting. Russian companies face about $20.3 billion in non-ruble loan and debt repayments before the end of March, according to data compiled by Bloomberg. The ruble has dived 35 percent this quarter.

“The most important measure is this use of third-quarter valuation for risk-weighted assets,” Natalia Berezina, banking analyst at UralSib Capital, said by phone. “This is a big boost as some banks would fail to meet central bank regulatory capital ratios at their current levels.”

This Bloomberg article, filed from Moscow, put in an appearance on their website at 10:02 a.m. Denver time yesterday morning---and I thank reader Howard Wiener for finding it for us.

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Jim Rickards: Ruble Crisis -- Is Russia's Economy in a Tailspin?

James Rickards, author of "Currency Wars," UBS Wealth Management's Jorge Mariscal and Bloomberg economist Carl Riccadonna discuss Russia's efforts to stem the ruble crisis. They speak with Bloomberg's Trish Regan on "Street Smart."

This 6:47 minute Bloomberg video clip from Tuesday falls into the absolute must watch category---and it's another offering from Harold Jacobsen.

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We Are Headed For a Major Dis-location and It Revolves Around the Dollar

The United States declared economic war on Russia. It is hard to pinpoint the why of the matter but in this author’s opinion it always comes back to U.S. dollar dominance. Russia has made no secret of its disdain for the global pricing mechanism of oil. The chart below shows what matters in the pricing of oil and it has zero to do with shale miracles or over supply.

It is the dollar and only the dollar that matters in the pricing of oil with an exception being an act of nature.  The West has attacked the currency of a sovereign nation for UNECONOMIC reasons.

Russian debt to GDP is roughly 14%. Their debt to GDP is pristine. Japan’s is 227%, Greece 175%, Italy 132%, and the U.S. 105%. Now can someone kindly explain why a currency would implode like the Ruble when their financial condition relative to the West and Japan looks like a Ferrari among a bunch of Ford Pintos?

This guest post appeared under Koos Jansen's name over at the Internet site yesterday---and I'm breaking my own rule of posting an unaccredited source, because the author, whoever he is, has it exactly right.  It's certainly worth reading.

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Russia's sinking economy becoming a global threat

Russia's suddenly escalating financial crisis risks spilling beyond its borders and endangering parts of the global economy.

With economies in Europe, Japan, China and Latin America already ailing, fresh threats have emerged from Russia's shriveled currency, its move to dramatically boost interest rates, the damage from plummeting oil prices and Western sanctions over Russia's action in Ukraine.

"Our deepest fear has been - and still is - that putting Mr. Putin in a `nothing-to-lose' situation removes any constraint he might have had against reneging on his foreign debt obligations, which Russian borrowers probably cannot pay off or service now," writes Carl Weinberg, chief economist at High Frequency Economics. Foreign lenders would have to brace for $670 billion in losses.

This possibility has sparked an investor retreat from Russia. But that pullback has also caused investors to flee other emerging market currencies that are deemed risky. They include Turkey, Brazil, South Africa and Indonesia, noted John Higgins, chief markets economist at Capital Economics.

Doug Noland will have a field day with all this in his Friday evening Credit Bubble Bulletin.  This AP story, filed from Washington, showed up on their Internet site at 5:27 p.m. EST on Tuesday afternoon---and I found it in yesterday's edition of the King Report.

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Russia makes knock-off European cheese as embargo bites

The Camembert made near Moscow might look -- or even smell -- like the famous French fromage, but it's part of a booming knock-off market in Russia as stocks of banned European cheeses disappear.

Mozzarella made in the Russian region of Bryansk and Roquefort from Altai in Siberia are also part of the flourishing trade that has popped up since Russia decreed a food embargo in response to Western sanctions in the summer.

The names Roquefort and Mozzarella cannot be used in the European Union, and increasingly abroad, unless the products are made in a particular place or in a certain way.

However, since Soviet times, Russians have been swilling local Champagne and Cognac -- although both names are protected under E.U. rules -- without too much concern.

This interesting article showed up on the Internet site at 5:06 p.m. Europe time on their Wednesday afternoon---and it's another contribution from reader B.V.

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Little cheer for Greece's government in first presidential ballot as Dimas draws 160 votes

The government garnered 160 votes in the first round of crucial presidential elections on Wednesday, performing slightly worse than anticipated and increasing speculation about snap polls.

In addition to the 155 coalition MPs, five independents backed the government’s candidate, former European commissioner Stavros Dimas. Another 135 voted “present” while five were absent. The result was far short of the 200 votes required in the first round, a target that the government is also certain to miss in next week’s second round. However, ahead of the critical third vote on December 29 when the threshold drops to 180, the government had hoped to gain between 161 and 165 in the first round in a bid to build momentum for the votes to come.

There were some surprises, including the decision by independent Panayiotis Melas to vote “present” rather than backing Dimas (Melas later suggested he might change his stance in the coming votes). Also two former MPs of neofascist Golden Dawn, Chrysovalantis Alexopoulos and Stathis Boukouras, who was released from prison earlier on Wednesday, did not turn up for the vote.

Meanwhile seven Golden Dawn lawmakers were granted day release from Korydallos Prison to attend the vote. They were subdued for the most part despite fears of upheaval.

You couldn't make this stuff up.  This news item appeared on the Internet site at 8:53 p.m. Europe time last night---and my thanks go out to Harry Grant for bringing it to our attention.

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China Prepares to Bailout Russia?

Earlier this evening China's State Administration of Foreign Exchange's (SAFE) Wang Yungui noted "the impact of the Russian Ruble depreciation was unclear yet, and, as Bloomberg reported, "SAFE is closely watching Ruble's depreciation and encouraging companies to hedge ruble risks."

His comments also echoed the ongoing FX reform agenda aimed at increasing Yuan flexibility which The South China Morning Post then hinted in a story entitled "Russia may seek China help to deal with crisis," which which noted that Russia could fall back on its 150 billion yuan ($24 billion) currency swap agreement with China if the ruble continues to plunge, that was signed in October. Furthermore, two bankers close to the PBOC reportedly said the swap-line was meant to reduce the role of the U.S. dollar if China and Russia need to help each other overcome a liquidity squeeze.

This Zero Hedge article showed up on their website at 11:17 p.m. EST late last night---and I thank Casey Research's own Bud Conrad for passing it around.

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Yuan Has Real Shot at IMF Blessing on Reserve Status

For the first time, China has a real shot at getting the International Monetary Fund to endorse the yuan as a global reserve currency alongside the dollar and euro.

In late 2015, the IMF will conduct its next twice-a-decade review of the basket of currencies its members can count toward their official reserves. Including the yuan in this so-called Special Drawing Rights system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance.

China would need to satisfy the Washington-based lender’s economic benchmarks and get the support of most of the other 187 member countries. The Asian nation is likely to pass both tests, said Eswar Prasad, who until 2006 worked at the IMF, including spells as heads of its financial studies and China divisions.

This very interesting Bloomberg article showed up on their website a week ago---and it's worth reading.

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Strange rock containing 30,000 diamonds baffles scientists

When Russian miners pulled a strange red and green stone out of the ground, they immediately knew it was different to the thousands of tons of ore they process every day.

In fact, what workers at Alrosa's Udachnaya diamond mine had unearthed was a 30mm rock that contained 30,000 diamonds - a concentration 1m times higher than normal.

However, despite the rare find the company donated the rock to the Russian Academy of Sciences, as the diamonds are so small that they cannot be used as gems.

After scanning the rock with X-rays, scientists found that the diamonds inside measure just 1mm and are octahedral in shape - similar to two pyramids stuck together at the base. The red and green colouring comes from larger crystals of garnet, olivine and pyroxene.

This interesting news item appeared on the Internet site at 5:20 p.m. GMT yesterday afternoon---and it's the final offering of the day from South African reader B.V.

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The Gold Chronicles: Dec 9, 2014 Interview with Jim Rickards

This 49:17 minute audio interview appeared on the Internet site on Tuesday sometime---and it's the final contribution of the day from Harold Jacobsen.  There's no transcript---and I must admit that I haven't had time to listen to it all, but what I have heard makes it worth your while, although some of what he says, you've certainly heard before.

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Lawrence Williams: Have gold and silver really bottomed this time?

At the recent Mines & Money conference and exhibition In London there was a perhaps surprisingly upbeat feel given the poor performance of metals prices over the preceding two to three years.

While this optimistic mood seemed to apply to precious and base metals producers alike, as is the norm nowadays it was the gold companies which were looking for the biggest upside. Perhaps this was because those that can nowadays afford to participate in an event like this – it is expensive to exhibit and to attend – are those who are going to survive in the current price environment come what may. But perhaps even more prevalent was the perceived view that things were at last truly bumping along the bottom and that the only way forward was up.

There are a lot of factors supporting this latter viewpoint, but it’s probably just as well for the bulls out there not to get too carried away as many of these bullish factors have been around before and still prices have continued to be driven down. But this time perhaps the optimists do have a point.

On gold and silver demand, this appears to be riding high. Chinese Q4 demand as represented by Shanghai Gold Exchange withdrawals has been just as strong as it was in the 2013 record year. True demand had slipped pretty badly in Q2 and Q3 compared with a year earlier, but it has staged a huge pick up since the end of September. But perhaps even more significant has been India’s return to the gold buying spree with November gold imports officially put at 150 tonnes, although some assessments had even suggested it might have been as high as 200 tonnes.

This commentary by Lawrie, which was posted on the Internet site on Wednesday, is certainly worth reading--and I thank him for sliding it into my in-box early yesterday morning.

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Dec 17, 2014

The MSM Misleads Again: Housing Starts Didn’t ‘Weaken’ A Tad In November, They Plunged

Don’t believe everything you read in the mainstream media. Especially don’t believe anything in the financial news media until you’ve looked at the data yourself.  It’s no wonder investors are so often caught flatfooted in the markets. Financial “journalists” feed their readers and viewers a constant stream of misinformation and bad data. Financial reporters are so atrocious at serving their audience I have to believe that they are, wittingly or unwittingly, part of a deliberate and elaborate campaign of disinformation… unless you believe in Coincidence Theory.

Housing starts collapsed in November. They weren’t good, they weren’t even so-so as media reports intimated. The seasonally adjusted annualized number which the paid flacks report is absolute nonsense. It’s fiction.

Actual, not seasonally adjusted single family starts were down by 10,400 units in November to 47,700 units. November is always a down month but this was the worst November performance since 2008, in the teeth of the housing crash.  On a year to year basis starts were down by 6.3%. It’s absurd that you can’t find that fact anywhere near the mainstream media headlines. In fact, Bloomberg outright lied about it.

This commentary by Lee Adler appeared on David Stockman's website yesterday sometime---and today's first story is courtesy of Roy Stephens.

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Federal Reserve Reinflating Real Estate Bubble - Mike Maloney

This 5:51 minute video clip with Mike Maloney put in an appearance on the Internet site yesterday sometime.  I thank Dan Rubock for sending it my way.

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Oil plunge, Russia crisis challenge U.S. Federal Reserve

The relentless fall in oil prices and Russia's plunging currency pose big challenges as the US Federal Reserve opens a two-day meeting Tuesday.

The Fed's last meeting of 2014 was expected to confirm its path toward monetary policy normalization after holding its base interest rate at the zero level for six years to bring the country out of the Great Recession.

But stagnating economies in Europe and Japan and slowing growth in China, coupled with the threats to markets and the financial system from the oil price and Russian crises, could force the US central bank to weigh a pause.

While the world's most powerful central bank is unlikely to make any immediate changes to its interest rate and liquidity stance, it could signal via comments and economic forecasts a readiness to stick to that stance for longer than expected to help the global economy through a rough period.

This AFP article, filed from Washington, appeared on the Internet site at 5:16 p.m. EST on Tuesday---and it's the first offering of the day from South African reader B.V.

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Obama will sign Russia sanctions bill despite reservations

The bill - which primarily sanctions Russia's defence industries - passed with overwhelming support in Congress.

Spokesman Josh Earnest said the bill sent "a confusing message to our allies" but Mr Obama will sign it because it "preserves flexibility".

Russia's rouble has lost half its value this year amid lower oil prices and Western sanctions.

The currency went into free-fall in trading on Tuesday.

The bill would also give Mr Obama the authority to provide lethal and non-lethal military assistance to Ukraine, but not require him to do so.

This short article appeared on the Internet site at 4:39 p.m. EST yesterday afternoon---and it's the second offering of the day from Roy Stephens.

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T. Boone Pickens on where oil prices will settle

This 6:08 minute video interview from Fox Business was posted on the Internet site at 8:41 p.m. EST on Monday evening---and I thank reader William Gebhardt for sending it along.

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$1 Trillion in Global CapEx at "Unambiguous" Risk as a Result of Crude Crash

Just like with the Mohammed Islam story, the religious belief by the cheerleading crew that the crashing price of oil is so "unambiguously, unquestionably, indisputably" good for the U.S. is so taken for granted, that nobody actually checked the facts.  So here is one such attempt by the Financial Times, which writes that "almost $1 trillion of spending on future oil projects is at risk as a result of the plunge in crude to $60."

The price plunge has shaken the energy industry, throwing some of the majors’ most ambitious plans into doubt and pummeling oil company shares. Projects in challenging frontier regions like the deep waters of the Gulf of Mexico are predicated on high oil prices and may not be economic with oil at $60 a barrel — the level Brent was trading at on Monday afternoon.

Goldman has examined 400 oil and gas fields around the world, many of which are still awaiting a final investment decision. Its analysis, based on a $70 oil price, shows that fields representing 2.3m b/d of output by 2020 and awaiting a green light have now become uneconomic. That figure rises to 7.5m b/d of production by 2025. The analysis excludes U.S. shale.

The bank shows that companies will need to cut costs by up to 30 per cent — for example by forcing suppliers to take steep price cuts — to make these projects profitable at $70 a barrel.

This Zero Hedge article appeared on their Internet site at 10:58 a.m. EST on Tuesday---and it's the first contribution of the day from Manitoba reader U.M.

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Jim Rickards: Same Currency War, New Battle Phase

The current global currency war started in 2010. My book, Currency Wars, came out a little bit after that. One of the points that I made in the book is that the world is not always in a currency war. But when we are, they can last for a very long time. They can last for five, 10 or 15 years, sometimes longer.

And so it’s really not a surprise that here we are in 2014 talking about currency wars because it’s the same on that’s been going on. A lot of what you read or see on the TV is after some policy move by, let’s say, Japan to weaken the yen. And reporters will say: “Hey, there’s a currency war going on,” or “There’s a new currency war.”

I roll my eyes a little bit and go: “No, this is the same one, the same currency war; it’s just a new phase or new battle.”

So yes, it is going on. And it does have a lot of explanatory power. It’s one of the most important things going on in economics today. I think a year from now, I’ll be writing to you and we’ll still be talking about it.

This commentary by Jim appeared on the Internet site on Monday sometime---and it's courtesy of Harold Jacobsen.

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Venezuela—The Sequel

The government fixing of prices in grocery stores has caused unnaturally low prices on many staple goods. A predictable result has been that Venezuelans have been cleaning out the shelves at supermarkets and taking the goods to neighbouring Colombia for resale. (Colombia maintains free-market pricing, and as such, a profit can be made by Venezuelans.)

Typically, such staples as meat, grains, and toilet paper are bought immediately upon delivery to the supermarkets in Venezuela. Shortages are so significant that people frequently queue at supermarkets in shifts, as the waits are so long to receive goods.

This movie is, of course, ongoing. Historically, however, food shortages tend to occur in the latter stages of a decline, just prior to collapse of the system. (No fear is more gripping in the minds of a population than the fear of starvation, and already, in the last year, food prices have nearly doubled in Venezuela.)

This commentary by Jeff Thomas appeared on the Internet site on Monday---and I thank their senior editor Nick Giambruno for sending it along yesterday.

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German Private Sector Activity Hits 18 Month Low: Report

The German private sector, considered the backbone of the country's economy, expanded at the slowest pace in 18 months in December, increasing the risk that growth will slow further at the beginning of 2015, said a report released by the Markit Economics research group Tuesday.

"Today's flash PMI [Purchasing Managers' Index for manufacturing and services] results showed that private sector output growth in Germany slowed further in December. The pace of expansion was in fact the weakest in one-and-a-half years and well below levels seen earlier in the year, when GDP grew 0.8%," the author of the study Oliver Kolodseike said in comments to the report.

Kolodseike suggested that the reduction of oil prices and energy costs gave German private companies a chance to lower prices, but do not help the firms attract new customers.

Overall German company performance has also been affected by the recent train operator and airline pilot strikes in Germany in late October and November of this year.

This short business news item showed up on the Internet site at 6:58 p.m. Moscow time on their Tuesday afternoon, which was 8:58 a.m. in New York.  I thank South African reader B.V. for sharing it with us.

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Chevron suspends Ukrainian shale efforts

U.S. energy company Chevron said it was still looking for opportunities in Ukraine, but opted to shelve a contract to tap the country's shale gas potential.

In October, members of a regional council in Ukraine approved a draft production agreement for shale natural gas with Chevron. The deal was formalized in November.

Ukraine is one of the Eastern European countries thought to be rich in shale natural gas and the government estimates there may be enough natural gas in shale plays to meet the country's needs without imports.

Peter Clark, country manager for Chevron, told the Kiev Post the company terminated the production agreement because of legislative hurdles in Ukraine.

This very interesting UPI story showed up on their website at 8:01 a.m. EST yesterday---and I thank Roy Stephens for sharing it with us.

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The Real Reason Shell Halted Its Ukrainian Shale Operations

Royal Dutch Shell has blamed air strikes by the government in Kiev against its own citizens in southern Ukraine as the reason it decided to declare a halt to its shale oil projects in the troubled region.

In reality, the truth may be closer to the fact that company is disappointed with the economic viability of what it once thought was a large shale deposit and is looking for a way out.

After a series of dramatic statements and the signing of a $410-million letter of intent, a veil of uncertainty is being drawn around the myth of Ukrainian shale.

According to a recent statement by the former head of Royal Dutch Shell, Peter Voser, “the company is now analyzing its business in shale,” which, translated from the streamlined language of press releases, means: The project is not earning its keep and we need to do something (Read: write off expenses).

This very interesting article [datelined 19 June 2014] put in an appearance on the Internet site---and it's definitely worth reading in light of the UPI/Chevron article posted above it.  I thank Brad Robertson for digging this up on our behalf.

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Putin Discusses Donbas Situation With Merkel, Hollande, Poroshenko: Kremlin

Russian President Vladimir Putin has held a telephone conversation with German Chancellor Angela Merkel, French President Francois Hollande and Ukrainian President Petro Poroshenko, discussing the situation in Donbas (Ukraine's southeastern regions), the Kremlin's press service announced Wednesday.

The Kremlin's statement stressed "the importance of a swift meeting of the Contact Group with the aim of implementing the Minsk agreements and facilitating dialogue between Kiev and [Ukraine's] southeast".

"The issues of the economic recovery of the affected regions [Donbas] and the provision of humanitarian and social support to the [local] population have [also] been discussed," the statement added.

This news item, filed from Moscow, showed up on the website at 2:02 a.m. Moscow time on their Wednesday morning---and it's another contribution from Roy Stephens.

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THE INTERVIEW: 'We will survive sanctions,’ says Russian foreign minister

“Russia will not only survive but will come out much stronger,” he said, brushing aside concerns about the country's crisis-hit economy. “We have been in much worse situations in our history and every time we have got out of our fix much stronger.”

Lavrov pulled no punches over his contempt for Western-imposed sanctions, levied against Russia for its alleged meddling in a pro-Moscow insurgency in eastern Ukraine following the ouster of the pro-Kremlin president in February. 

He saved his most scathing comments for the E.U.: “Of course sanctions hurt, but I don’t believe the sanctions will help the European Union. The United States ordered the E.U. to impose sanctions and frankly we have overestimated the independence of the European Union [from the U.S.].”

“Sanctions are a sign of irritation, they are not the instrument of serious policies,” he added.

This must watch video interview, especially for any serious student of the New Great Game, showed up on the Internet site yesterday afternoon.  It runs for a surprising 25:15 minutes.  There is a transcript, but it's tiny.  It's another offering from reader B.V.

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The Russian Ruble is Hereby Halted Until Further Notice

Earlier, we reported that various currency brokers such as FXCM and FxPro, would - as a result of the soaring liquidity in the USD/RUB pair - suspend trading in the Russian Ruble (while other merely hiked margins to ridiculous levels). It appears things have escalated again, and as FXCM just reported, instead of just politely advising clients not to open new USD/RUB position tomorrow, it has advised anyone long, or short, the USD/RUB that their positions will be forcibly shut in moments.

So for those curious why there appears to be a collapse in Ruble volatility in the past few hours which in turn has sent both stocks and crude soaring, the answer is simple: nobody is trading it!

And this is what happened following the post: as soon as all those short the RUB (long USD/RUB) realized they have to take profits, the USD/RUB tumbled some 500 pips (!) in the process sending stocks surging.

This must read news item, along with some excellent charts, appeared on the Zero Hedge website at 2:20 p.m. EST yesterday---and I thank 'David in California' for sending it our way.

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George Friedman: Viewing Russia From the Inside

Last week I flew into Moscow, arriving at 4:30 p.m. on Dec. 8. It gets dark in Moscow around that time, and the sun doesn't rise until about 10 a.m. at this time of the year — the so-called Black Days versus White Nights. For anyone used to life closer to the equator, this is unsettling. It is the first sign that you are not only in a foreign country, which I am used to, but also in a foreign environment. Yet as we drove toward downtown Moscow, well over an hour away, the traffic, the road work, were all commonplace. Moscow has three airports, and we flew into the farthest one from downtown, Domodedovo — the primary international airport. There is endless renovation going on in Moscow, and while it holds up traffic, it indicates that prosperity continues, at least in the capital.

Our host met us and we quickly went to work getting a sense of each other and talking about the events of the day. He had spent a great deal of time in the United States and was far more familiar with the nuances of American life than I was with Russian. In that he was the perfect host, translating his country to me, always with the spin of a Russian patriot, which he surely was. We talked as we drove into Moscow, managing to dive deep into the subject.

From him, and from conversations with Russian experts on most of the regions of the world — students at the Institute of International Relations — and with a handful of what I took to be ordinary citizens (not employed by government agencies engaged in managing Russia's foreign and economic affairs), I gained a sense of Russia's concerns. The concerns are what you might expect. The emphasis and order of those concerns were not.

This commentary by Stratfor Chairman George Friedman appeared on their Internet site at 9:02 a.m. GMT yesterday---and it's definitely worth reading, especially for all serious students of the New Great Game.  It will take you 15 minutes to run through this, but it's more than worth it if you have the interest.  The first reader through the door with this yesterday was Roy Stephens.

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Oil Trades Near 5-Year Low as Russia Matches OPEC Output Policy

Oil in New York traded near a five-year low as Russia reiterated that it will keep crude production steady next year, echoing OPEC’s strategy to refrain from curbing supply to tackle a global surplus.

Futures fell as much as 2.4 percent after sliding below $54 a barrel yesterday for the first time since May 2009. Output from Russia, the world’s largest crude producer, will be similar to this year’s 10.6 million barrels a day, according to Energy Minister Alexander Novak. Iran is said to be offering shipments to Asia at the deepest discount in at least 14 years, taking a cue from Saudi Arabia in cutting price differentials.

Oil has slumped 44 percent this year as a surge in shale drilling lifted U.S. output to the fastest pace in three decades amid slowing world demand growth. Leading members of the Organization of Petroleum Exporting Countries such as Saudi Arabia have resisted calls from smaller producers including Venezuela and Ecuador to reduce quotas to stem the price rout.

“OPEC won’t make a move unless the U.S. cuts its production first, and for now it looks like the game of chicken will most likely continue through next year,” Kang Yoo Jin, a commodities analyst at Woori Investment & Securities Co. in Seoul, said by phone. “As oil prices are slumping, it seems to be a strategic decision for producing countries including OPEC and Russia to keep their output levels unchanged.”

This Bloomberg story, filed from Seoul, South Korea on Wednesday morning, appeared on their website at 10:45 p.m. MST on Tuesday evening.  Marin Katusa passed it around the Casey Research crowd late last night.

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Russia's Alternative to SWIFT Would Cause Big Problems for the West

The international financial system is based on the U.S. dollar. The greenback is both the world’s “reserve currency” — the one everyone wants to hold when things go bad — and the principal means of exchange. The vast majority of transactions between companies, countries and people are denominated in dollars.

As my investment-oriented colleagues regularly discuss on this page, the dollar’s dominance isn’t unchallenged. The Chinese yuan, in particular, has pretensions to become a second global currency, one so widely used that transactions unrelated to China could be conducted in yuan.

But there’s another challenge on the horizon … a new international interbank system that could create important opportunities — or chaos — for the world economy, depending on how the proverbial ball bounces.

This very interesting commentary showed up on the Internet site yesterday---via The Sovereign Investor.  It's also courtesy of Roy Stephens.

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Erdogan speech indicates deep rift with E.U.

Turkish leader Recep Tayyip Erdogan has told the EU to “mind its own business” on free press, marking an ever-deeper rift in relations.

He made the comments at a speech in the Tupras oil refinery outside Istanbul on Monday (15 December) after European officials criticised his latest arrests of opposition-linked journalists.

“They cry press freedom, but they [the arrests] have nothing to do with this … We have no concern about what the EU might say, whether the EU accepts us as members or not, we have no such concern. Please keep your wisdom to yourself”, he said.

“The EU should not intervene in acts taken by the police and judiciary against entities that jeopardise our national security. It should mind its own business”.

This news item, filed from Brussels, appeared on the Internet site at 8:43 a.m. on their Tuesday morning---and it's the final offering of the day from Roy Stephens, and I thank him on your behalf.

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China’s Treasury Holdings Fall to Lowest Since February 2013

China’s holdings of U.S. Treasuries fell to a 20-month low in October, as yuan appreciation indicated less of an impetus to buy the government securities.

China held $1.25 trillion in U.S. debt as of October, a $13.6 billion drop from September, the Treasury Department said in a monthly report today. The nation remains the largest foreign holder, ahead of Japan, whose stockpile increased $0.6 billion to $1.22 trillion, reducing the gap between the two countries to the narrowest since September 2012.

The yuan rose 0.4 percent against the dollar in October as the government moves toward a market-determined exchange rate, part of efforts to expand the currency’s use worldwide. The less China intervenes to weaken its currency, the less it needs to buy securities such as Treasuries.

“The lack of growth in their Treasury portfolio has been happening throughout this year, so I tend to think it’s more of a structural trend that’s developing,” said Stanley Sun, an interest-rates strategy analyst at Nomura Securities International Inc. in New York. He said he expects “a grind lower rather than any sharp decline” in holdings.

This Bloomberg article, filed from Washington, was posted on their website at 3:53 p.m. Denver time on Monday afternoon---and I thank reader M.A. for bringing it to our attention.

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Traders betting Russia's next move will be to sell gold

Russia’s surprise interest-rate increase failed to stop the plummeting ruble. The next weapon available to repair economic havoc caused by sanctions and falling oil prices: selling gold.

Russia holds about 1,169.5 metric tons of the precious metal, the central bank said last month. That’s about 10 percent of its foreign reserves, according to the London-based World Gold Council. The country added 150 tons this year through Nov. 18, central bank Governor Elvira Nabiullina told lawmakers. 

Russia’s cash pile has dropped to a five-year low as its central bank spent more than $80 billion trying to slow the ruble’s retreat. The currency’s collapse combined with more than a 40 percent tumble in oil prices this year is robbing Russia of the hard currency it needs in the face of sanctions imposed after President Vladimir Putin’s annexation of Crimea. A fall in gold prices signals that traders are betting that the country will tap its reserves.

I'll be amazed if Russia taps its gold reserves---and I expect an update with their November Central Bank gold purchases on Friday.  This Bloomberg story showed up on their website sometime yesterday afternoon Denver time, but was updated just before midnight.  It also carries another propaganda line about Russia's annexation of the Crimea.  I found it in a GATA release yesterday.

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Commodity Trading Giant Exits Physical Gold Due to "Lack of Physical With a Documented Origin"

Back in March, otherwise very under-the-radar Swiss commodities trading giant Gunvor and the fifth largest oil trader in the world, made headlines in the press when one of its then-Russian owners, billionaire Gennady Timchenko (estimated net worth of $8.5 billion), sold his entire 44% stake in the company to his partner in the firm, Torbjorn Tonqvist, just a day before the U.S. revealed its first round of sanctions against individuals affiliated with the Putin regime. Timchenko was among them. As a result of the sale, however, Gunvor avoided falling on the U.S. sanctions list and a Treasury official said that "Gunvor Group Ltd. isn’t subject to automatic blocking from dealing with U.S. persons under Russian sanctions because co-founder Gennady Timchenko owns less than 50 percent of the company."

Since then the Geneva-based company rarely appeared in the media which is how the nondescript company liked it. Until last week, that is, when Bloomberg reported that the company was giving up trading physical precious metals, read gold, less than a year after the commodity house started a business dedicated to buying and selling gold. Gunvor is, or rather was, one of the few large commodity firms that handles precious metals.

But the biggest surprise in this story was the reason why Gunvor chose to discontinues its gold trading. Per Bloomberg, "executives decided to abandon the precious metals trading business partly because of difficulties in finding steady supplies of gold where the origin could be well documented, one of the people said."

I'm not sure what to make of this Zero Hedge/Bloomberg piece that appeared on their Internet site at 10:35 p.m. EST last night.  It's worth reading---and I thank reader 'David in California' for sending it along.

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Gold hedging creeps back

Mining companies are set to increase their outstanding net forward gold sales by between 42 and 52 tonnes in 2014, the largest expansion of the global gold hedge book of any year since 1999, an industry report said on Tuesday.

In their quarterly Global Hedge Book Analysis, Société Générale and GFMS analysts at Thomson Reuters said although the global hedge book shrank by 6 tonnes in the third quarter and will contract further in the fourth, they still expect net hedging in the full year.

Increased hedging would theoretically be negative for gold prices, as forward sales add to supply as gold is leased and sold forward. But despite the recent price drop, mining companies are wary of a wholesale return to hedging, after they lost billions of dollars unwinding hedged positions in the mid 2000s.

No gold mining company will sell their production forward at these prices---and even if they did, these small amounts are not even close to being material.  This Reuters story, filed from London yesterday, is much ado about nothing.  I thank reader U.M. for bringing it to my attention---and now to yours.

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Gold Imports ‘Phenomenal’ In India - 571 Percent Surge To 150 Tonnes in November

India's gold imports were over a staggering 150 tonnes in November and have seen a "phenomenal" rise in India according to India’s Trade Secretary, Rajeev Kher.

A few weeks ago we said that the death of the Indian gold market was greatly exaggerated. The latest gold import data out of India confirms this.

The import restrictions on gold that were imposed on Indians in August of 2013 were lifted at the end of last month. Despite the fact that the restrictions were still in place gold importation in November surged an incredible 571% relative to the same month last year at over 151.58 tonnes.

This was an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday.

261 tonnes of gold imports in two months for India is a huge amount---and along with what China's taking off the market, one has to wonder where all this gold is coming from.  This commentary on Indian gold imports by Mark O'Byrne appeared on the Internet site yesterday---and is worth your while.

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India to weigh gold policy impact after jump in November imports

India will weigh the impact of last month's easing of gold import rules after inbound shipments jumped 38 percent in November to push its trade deficit to an 18-month high, Trade Secretary Rajeev Kher said on Tuesday.

In a surprise move, the world's second-biggest gold consumer scrapped a rule for traders to export 20 percent of all gold imports, belying expectations for tighter curbs instead.

After the change, gold imports surged to 151.58 tonnes in November, an increase of 38 percent from 109.55 tonnes a month earlier, trade ministry data showed on Tuesday.

This gold-related Reuters story, filed from Mumbai, was posted on their Internet site at 10:25 p.m IST on their Tuesday evening---and contains a lot of the same information that was in Mark's column posted above, but there is other information, so it's worth your while if you have the time.  I thank Manitoba reader U.M. for her final contribution in today's column.

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Lower Barrick ore grades, Midas sale cuts into U.S. gold output by 7 percent Y.T.D.

U.S. gold mine production declined 7% in the first nine months of this year, the U.S. Geological Survey has reported.

The decline was partly attributed to lower production from Barrick Gold Corp. and Newmont Mining.

Barrick’s Cortez Mine in northern Nevada produced 21,600 kg (684,451 troy ounces) in the first nine months of this year for a 36% decline in output, which was attributed to a lower ore grade.

Production for Newmont’s Nevada operations during the same period also dropped 10% to 34,600 kg (1,112,407 oz) because of the sale of the Midas Mine and a development phase that will increase waste stripping and decrease mill throughput at several mines, said the USGS.

The production decreases were partially offset by Rio Tinto’s Bingham Canyon Mine with 7,060 kg (226,982 oz) in the first nine months of the year, a 70% increase over the same period of last year when the operation was still recovering from a massive landslide.

There are a lot of facts and figures in this news item that appeared on the Internet site yesterday---and it's definitely worth your while if you're into numbers.

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Dec 16, 2014

Gross: U.S. structural growth rate to be about 2% or less

Bill Gross said in an exclusive interview with CNBC on Monday that economic growth will likely fall to 2 percent.

"Yes, we're starting from a 3 percent growth economy that will probably persist for another quarter or so," he said. "We get back to a relatively new structural growth rate, which is not 3 but probably 2 or even less."

He attributed the decline to falling oil prices, which in turn affects industries such as fracking. Oil's slide also "determines currency movements," setting off a chain reaction.  Gross said it would be "very difficult" for oil prices to stabilize.

Financial conditions are also problem, Gross said.

This short story appeared on the CNBC website Monday afternoon---and I thank reader Dan Lazicki for today's first item.

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FOMC Decision on 'A Considerable Period'

The Federal Reserve will decide [this] week whether interest rates will remain low for “a considerable period” or perhaps some other time frame designated by central bank policy makers.

The policy-setting Federal Open Markets Committee meets for two days -- Tuesday and Wednesday -- with an announcement scheduled for 2 p.m. EST Wednesday and a press conference by Fed Chair Janet Yellen to follow.

The Fed is widely expected to address the timing of interest rate hikes, possibly by altering the language of its statement to eliminate the phrase “a considerable period,” which was added earlier this year to describe how long rates would stay low after the Fed ended its monthly bond-buying program.

The bond buying program ended in October and markets are on edge as to when the Fed will raise rates and how they will communicate that move. Most analysts have interpreted the “considerable period” phrase to mean about six months, which would match with the consensus belief that the Fed will start raising rates in mid-2015.

Jim Rickards says that the Fed won't raise rates again, ever.  We'll see.  This article appeared on the Internet site on Friday---and I thank Dr. David Richardson for sharing it with us.

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Matt Taibbi: Dodd-Frank Budget Fight Proves Democrats Are a Bunch of Stuffed Suits

If the Democrats actually stood for anything other than sounding as progressive as possible without offending their financial backers, then they would do what Republicans always do in these situations: force a shutdown to save their legislation. How many times did Republicans hold the budget hostage to rescue the Bush tax cuts?

But the Democrats won't do that here, because they're not a real party. They're a marketing phenomenon, a big chunk of oligarchical Blob cleverly sold to voters as the more reasonable and less nakedly corrupt wing of a two-headed political establishment.

So they'll punt on this issue in the name of "maturity" or "bipartisanship," Wall Street will get a nice win, and Hillary Clinton or whoever else is being set up as the Blob candidate on the Democratic side will receive an avalanche of Financial Services donations to stave off Warren (who will begin appearing in the press as an unhinged combination of Lev Trotsky and Spartacus). A neat little piece of business all around. I don't know whether to applaud or throw up.  

This short [for Matt] blog showed up on the Internet site on Saturday---and I thank Manitoba reader U.M. for finding it for us.

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The Oil-Price-Shock Contagion-Transmission Pathway

As we noted previously, counterparty risk concerns (and thus financial system fragility) are starting to rear their ugly heads. In the mid 2000s, it was massive one-way levered bets on "house prices will never go down again."

When the cracks started to appear, the mark-to-market losses in derivatives led to forced liquidations and snowballed systemically. In the mid 2010s, it is massively levered one-way asymmetric bets on "commodity prices [oil] will never go down again."

Meet WTI-structured-notes... the transmission mechanism for oil-price-shocks blowing up the financial system.   Because nothing says exuberant ignorance like limited upside, unlimited downside OTC (illiquid) derivatives...

Here's BNP Paribas' 1-Yr WTI-linked notes that collapse if oil drops below $70...

This short, but very interesting Zero Hedge article appeared on their Internet site at 7:00 p.m. on Sunday evening---and it's worth a minute of your time.  My thanks go out to reader U.D. for passing it around.

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Oil Rot Spreading in Credit

Credit investors are preparing for the worst.

They’re cleaning up their portfolios, selling riskier debt that’s harder to trade in bad times and hoarding longer-term government bonds that do best in souring markets. While investors have pruned energy-related holdings in particular as oil prices plunge, they’re also getting rid of other types of corporate bonds, causing yields to surge to the highest in more than a year.

“We believe the pervasive nature of the sell-off is more reflective of overall liquidity concerns in the cash market than of fundamental deterioration,” Barclays Plc analysts Jeffrey Meli and Bradley Rogoff wrote in a report today. “The weakness, while certainly most pronounced in the energy sector, has been broad based.”

Rather than waiting around for a trigger to escalate this month’s sell off, investors are pulling out of dollar-denominated corporate debt now, causing a 0.8 percent decline in the notes this month, according to a Bank of America Merrill Lynch index that includes investment-grade and junk-rated securities. This would be the first month of losses since September.

This short Bloomberg piece, filed from New York, appeared on their website at 10:14 a.m. Denver time on Friday morning---and it's the second offering of the day from Dan Lazicki.

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U.S. isolated, BRICS to get greater voting power at IMF

Months after the formation of new financial institutions like the $100 billion BRICS Bank and the China-led Asia Infrastructure Investment Bank, Christine Lagarde, managing director of the International Monetary Fund (IMF), said Friday that the organization is ready to discuss IMF voting reforms without the United States to give BRICS and emerging countries greater voting power.

Lagarde said the IMF is disappointed with the US inaction to ratify the governance and quota reforms and will now move forward without Washington.

“The IMF’s membership has been calling on and was expecting the United States to approve the IMF’s 2010 Quota and Governance Reforms by year-end. Adoption of the reforms remains critical to strengthen the Fund’s credibility, legitimacy, and effectiveness, and to ensure it has sufficient permanent resources to meet its members’ needs,” Lagarde said in a statement.

“I have now been informed by the U.S. Administration that the reforms are not included in the budget legislation currently before the U.S. Congress. I have expressed my disappointment to the U.S authorities and hope that they continue to work toward speedy ratification,” she said.

It will be a frosty day in July [in the northern hemisphere] before the U.S. gives up it's veto power---and unless that happens, how the BRIC countries, plus others, divide up the percentage of the vote, it just doesn't matter.  This new items showed up on Internet site early on Saturday morning---and I thank South African reader B.V. for bringing it to our attention.

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On the Brink of War and Economic Collapse — Paul Craig Roberts

On occasion a reader will ask if I can give readers some good news. The answer is: not unless I lie to you like “your” government and the mainstream media do. If you want faked “good news,” you need to retreat into The Matrix. In exchange for less stress and worry, you will be led unknowingly into financial ruin and nuclear Armageddon.

If you want to be forewarned, and possibly prepared, for what “your” government is bringing you, and have some small chance of redirecting the course of events, read and support this site. It is your site. I already know these things. I write for you.

The neoconservatives, a small group of warmongers strongly allied with the military/industrial complex and Israel, gave us Granada and the Contras affair in Nicaragua. President Reagan fired them, and they were prosecuted, but subsequently pardoned by Reagan’s successor, George H.W. Bush.

Ensconced in think tanks and protected by Israeli and military/security complex money, the neoconservatives reemerged in the Clinton administration and engineered the breakup of Yugoslavia, the war against Serbia, and the expansion of NATO to Russia’s borders.

This is an absolute must read, especially if you're a serious student of the New Great Game.  It was posted on Paul's website last Friday---and even though several readers sent it in time for my Saturday column, I decided not to post it.  I've since changed my mind---and for good reason now that I've actually read it from start to finish.  I thank Malcolm Roberts for sending it.

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The Bank of England has missed its opportunity for greater transparency

Thursday’s publication and adoption of the Warsh review into transparency will change little. The date of publication of the minutes will be brought forward to coincide with the announcement of the interest rate decision, but they will not be transcripts. They will be only be published eight years later, some three years behind the five-year rule employed by the US Federal Reserve, with the Bank citing the UK’s six-to-eight-year business cycle as the prime reason behind the chosen delay. The European Central Bank, that bastion of openness, doesn’t publish its transcripts for 30 years, the Bank’s spinner pointed out, as if that made everything alright.

Even when these transcripts are published, they will not be in full. Instead they will be partial versions – missing out day one of the meetings when all the main discussion is said to take place – with publication due to start in 2023, some nine years from now. The argument for holding back on some of the transcripts is because, Bank sources hint, MPC members want to be able to speak freely, without fear of being held to something they’d said in jest eight years later.

Of course, it means that members can continue to espouse their own opinions in public, without the public knowing that they might have contradicted what they expressed behind closed doors.

This commentary was posted on The Telegraph's website at 8:48 p.m. GMT last Thursday---and I found it in a GATA release.

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Belgium paralysed by general strike

The entire Belgian airspace is closed on Monday (15 December), as well as high-speed trains from Brussels to London, Paris and Amsterdam and local buses, trams and metro lines, as part of a general strike over public sector cuts.

Schools, government offices and private firms are also likely to be closed on Monday. Garbage will not be picked up and newspapers will not be delivered.

Serious traffic jams are expected around Brussels and Antwerp, with transport trade unions calling on truck drivers to join in and "paralyse the country".

Trade unions already staged a huge march which ended in violent clashes with police a month ago, when the government first announced the plans to save €11 billion over the next five years. The measures include scrapping an automatic indexation of salaries next year and raising the retirement age from 65 to 67 from 2030.

This news item, filed from Brussels, put in an appearance on the Internet site at 9:09 a.m. Europe time on Monday morning---and it's the first offering of the day from Roy Stephens.

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Red-Faced Germans Forced to Ask Russia a Favor

Ukraine is apparently close to financial collapse: According to a report by FT the Finance Minister Wolfgang Schaeuble is said to have called his Russian counterpart Anton Siluanow: Schäuble is said to have asked the Russians to not demand repayment of a loan, that Kremlin had granted Ukraine last year, but to reschedule. The credit is 3 billion and could possibly trigger insolvency. The Russians have hedged their loans in elaborate legal contracts.

The IMF has identified a $15 billion deep hole in the Ukrainian government finances. This must be "filled within weeks to prevent the financial collapse," citing the FT the IMF. 15 billion dollars are needed in addition to those $17 billion, which the IMF Ukraine granted in April as credit. 

The IMF is concerned about the situation because of the willingness of the IMF states is small, to provide Ukraine new money. Finally, there have been no reforms, corruption flourishes unchanged and Western financial institutions are not impressed by an American as the Ukrainian Finance Minister says the E.U. Observer.

This story, originally posted on the German Economic News website---and translated into English by Google Translate---was picked up by the Internet site late on Monday morning Moscow time.  This item is courtesy of Roy Stephens as well.  It's worth reading.

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E.U. Foreign Policy Chief Expects New Sanctions Against Crimea on Dec.18

E.U. foreign affairs chief Federica Mogherini said Monday that additional E.U. sanctions against Crimea could be announced as early as on December 18.

Speaking at a news conference following the first Association Council meeting between the European Union and Ukraine, Mogherini said that in addition to the expanded individual sanctions list the E.U. will most likely introduce this week restrictive economic measures against Crimea.

"Just today in the Foreign Affairs Council we restated unanimously the political commitment for swift implementation of the part of the sanctions that were already decided, so I would expect the work at the working group level to be finalized in these very same hours and then a written procedure could finalize their implementation in time for the European Council [meeting] on Thursday," Mogherini said.

According to a draft E.U. document on the expansion of sanctions against Crimea, leaked to the media, the new restrictive measures include the prohibition for E.U. firms to invest in the region, as well as the ban on trading E.U. oil and gas exploration technologies.

This story, filed from Brussels, appeared on the website at 10:59 p.m. Moscow time on their Monday evening---and it's courtesy of Roy Stephens once again.

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Ukraine needs national referendum on NATO membership - PM

The issue of Ukraine’s possible accession to NATO requires a nationwide referendum, Ukrainian Prime Minister Arseny Yatsenyuk said Monday after a meeting in the Belgian capital with the North Atlantic alliance’s secretary general, Jens Stoltenberg.

“In line with current Ukrainian legislation, we will have to hold a referendum on the proposed agenda of NATO membership,” Yatsenyuk said.

He said that in order to join NATO, Ukraine also has to conduct reforms in the sphere of security, politics, economics and justice in order to bring them in line with NATO standards.

“We will keep following that roadmap,” Yatsenyuk said.

He said that “if the Ukrainian people speaks in favor of joining NATO in the referendum, this will allow Kiev to not only request but demand NATO membership.”

The above four paragraphs are all there is to this brief news item, filed from Brussels, that showed up on the Internet site shortly before midnight Moscow time last night.  It's the third contribution in a row from Roy Stephens.

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U.N. concerned by Kiev’s economic blockade of eastern Ukraine

The United Nations in its report on Monday expressed concerns about Kiev’s decision to relocate all state institutions and organizations in the areas not under the government’s control in the country’s east.

The report released by the Office of the U.N. High Commissioner for Human Rights in Geneva said these steps could aggravate the situation which “is becoming increasingly dire for the population still living in the east,” and could violate people’s social and economic rights.

“With the onset of winter and no let-up in the hostilities, the situation of approximately 5.25 million people living in the conflict and post-conflict affected areas is further deteriorating due to significant damage of the infrastructure, the breakdown of economic activities, and the disruption of social and medical services and social welfare benefits,” the report reads.

This story, filed from Geneva, was posted on the Internet site at 4:13 p.m. Moscow time yesterday afternoon, which was 8:13 a.m. in New York.  Once again my thanks go out to Roy Stephens.

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Russia Warns May Send Troops to Ukraine After Congress Unanimously Votes to Give Lethal Aid to Kiev

While the market, and America's media, was focusing over the passage of the Cromnibus, and whether Wall Street would dump a few hundred trillion in derivatives on the laps of US taxpayers once again (it did), quietly and unanimously both houses passed The Ukraine Freedom Support Act of 2014, which authorizes "providing lethal assistance to Ukraine’s military" as well as sweeping sanctions on Russia’s energy sector.

The measure mandates sanctions against Rosoboronexport, the state agency that promotes Russia’s defense exports and arms trade. It also would require sanctions on OAO Gazprom (GAZP), the world’s largest extractor of natural gas, if the state-controlled company withholds supplies to other European nations (yes, the U.S. is now in the preemptive punishment business, and is enforcing sanctions on a "what if" basis).

But while one may debate if additional sanctions will do much to impact a Russian economy which is already impaired due to the plunging ruble, the clear escalation is that unlike previously, when the US limited itself - at least on paper - to non-lethal assistance to the Ukraine, now the US is finally preparing to send in weapons, and potentially "military advisors" as well. We say "on paper", because in late November hacked U.S. documents revealed the extent of secret U.S. "Lethal Aid" for the Ukraine army. And since America's under-the-table support for Ukraine's insolvent armed forces has been revealed, there is little point in pretending to keep a moral upper hand (especially in light of recent "other" revelations involving the U.S., most notably its intelligence services).

This Zero Hedge piece was posted on their website at 12:47 p.m. EST on Sunday afternoon---and it's courtesy of reader M.A.

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Russia Increases Key Rate Most Since 1998 to Stem Ruble Rout

Russia’s central bank raised its benchmark interest rate the most since the nation’s 1998 default, making the announcement in the middle of the night in Moscow as policy makers seek to douse investor panic and stem a ruble rout.

The central bank increased the key rate to 17 percent from 10.5 percent effective today, it said in a statement on its website. Policy makers gathered for an unscheduled meeting after a one-point increase on Dec. 11.

“This decision is aimed at limiting substantially increased ruble depreciation risks and inflation risks,” the bank said in the statement.

Russia’s central bank raised interest rates for the sixth time in 2014 after more than $80 billion spent from its reserves failed to stop a 49 percent sell off of the ruble, the world’s worst-performing currency this year.

Besides the facts, this Bloomberg story has the usual b.s. Crimea propaganda.  It appeared on their website at 3:27 p.m. MST yesterday afternoon---and I thank Dan Lazicki for bringing it to my attention---and now to yours.  There was another somewhat similar Bloomberg story on this issue---also courtesy of Dan---and it's headlined "Ruble Tumbles Most Since 1998 as Traders Pressure Central Bank".  It's worth reading.

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Revitalized Turkey drifts away from Europe and towards Eurasia

Along with Russia, Turkey lies at the confluence between Europe and Asia. A peripheral European power, like Russia, it is following Moscow's lead and also looking east.

In Turkey, I found a nation of deep contrasts, but a country incredibly sure of its statehood and fastened together by a strong overriding identity. Unlike its Black Sea neighbors, most of whom are searching for a stable course, Turkey is assured and united.

A country without the deep-seated corruption of nearby ‘European’ states and the religious radicalism of its Middle Eastern neighbors, Turkey is back in business. It also has the potential to become the dominant power in its hinterland, if it isn’t already.

Relations between Moscow and Ankara have been making headlines due to a new gas deal which will replace the ill-fated South Stream project. Nevertheless, from a Turkish perspective, warmer relations with Russia are part of a greater pivot to Eurasia. After flirting with Europe for decades and being constantly spurned, Turkey no longer seeks to be an attachment to a failing EU. Indeed, many Turks expressed the view that being rejected by Brussels has turned out to be a lucky escape.

This op-edge commentary showed up on the Russia Today Internet site at 1:19 a.m. Moscow time on their Sunday morning---and it's the second-last offering of the day from Roy Stephens.

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OPEC willing to push oil price to $40 says Gulf oil minister

OPEC's most influential producers are willing to allow oil prices to fall to $40 per barrel before discussing whether the cartel should hold an emergency meeting to discuss cutting output.

According to Suhail al-Mazrouei, energy minister of the United Arab Emirates and a high profile delegate of the cartel: "We are not going to change our minds because the prices went to $60, or to $40."

The official's comments made to Bloomberg News at a conference in Dubai could add to further downward pressure on prices, which have already fallen more than 45pc since June. Brent crude - a global benchmark comprised of high-quality oil from 15 North Sea fields - closed last week at a new five-and-a-half-year low under $62 per barrel.

A slump in prices to levels around $40 per barrel would be a boost for parts of the UK economy and could see petrol prices drop close to £1 per litre providing relief to motorists. However, the slump will also threaten thousands of jobs in Britain's petroleum industry and according to Wood Mackenzie place around £55bn worth of oil projects in the North Sea and Europe at risk of cancellation

As this---and the following story shows---there is a big downside to cheap gas/petrol at the pump.   This article appeared on the Internet site at 11:45 a.m. GMT on Sunday morning---and it's worth reading.  It's also the final offering of the day from Roy Stephens, for which I thank him.

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Crashing crude may blow a $1.6 trillion hole in the global oil sector, annually

Talk about an oil spill. The spectacular unhinging of crude oil prices over the past six months is weighing mightily on the U.S. stock market.

And while it may be too early to abandon all hope that the market will stage a year-end Santa rally, it appears that if Father Christmas comes, there’s a good chance his sleigh will be driven by polar bears, instead of gift-laden reindeer.

Wall Street’s gift: a major stock correction.

Indeed, the Dow Jones Industrial Average DJIA, -0.58%  already endured a bludgeoning, registered its worst percentage decline since Nov. 25, 2011, down 677.96 points, or 3,78%. It was also the worst week for the S&P 500 SPX, -0.63% on a percentage basis since May 18, 2012. The S&P 500 was down 73. 04 points and 3.52% on the week.

But all that carnage is nothing compared to what may be in store for the oil sector as crude oil tumbles to new gut-wrenching lows on an almost daily basis. On the New York Mercantile exchange light, sweet crude oil for January delivery settled at $57.81 on Friday, its lowest settlement since May 15, 2009.

This brief commentary showed up on the Internet site at 9:36 a.m. EST on Sunday morning---and it's the final offering of the day from Dan Lazicki.

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Saudi Arabia is playing chicken with its oil

In August 1973, Egyptian President Anwar Sadat paid a secret visit to the Saudi capital, Riyadh, to meet with King Faisal. Sadat was preparing for war with Israel, and he needed Saudi Arabia to use its most powerful weapon: oil.

Until then, King Faisal had been reluctant for the Arab members of OPEC to use the “oil weapon.” But as the October 1973 Arab-Israeli war unfolded, the Arab oil producers raised prices, cut production and imposed an embargo on oil exports to punish the United States for its support of Israel. Without Saudi Arabia, the oil embargo would not have gotten very far.

Today, Saudi Arabia is once again using its “oil weapon,” but instead of driving up prices and cutting supply, it’s doing the reverse. In the face of a global slide in oil prices since June, the kingdom has refused to cut its production, which would help to drive prices back up. Instead, the Saudis led the charge to prevent OPEC from cutting production at the cartel’s last meeting on Nov 27.

The consequences of Saudi policy are impossible to ignore. After two years of stable prices at around $105 to $110 a barrel, Brent blend, the international benchmark, fell from $112 a barrel in June to around $65 on Friday. “What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. His answer? “To harm Russia.”

That is partially true, but Saudi Arabia’s gambit is more complex.

This commentary appeared on the Reuters website yesterday sometime---and it's definitely worth reading.

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Survey: Chinese manufacturing contracted in December

A survey of Chinese factories says manufacturing activity contracted in December in another sign the slowdown in the world's No. 2 economy is quickening.

HSBC's preliminary purchasing managers' index released Tuesday fell to a seven month low of 49.5 from 50 in November.

The index uses a 100-point scale on which numbers above 50 indicate expansion.

It's the latest in a string of weak data on China's economy, which expanded at a five-year low of 7.3 percent last quarter. That rate was below the official full year target of 7.5 percent.

This short AP story was posted on their website at 9:24 p.m. EST yesterday evening---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Abe's coalition secures big Japan election win with record low turnout

Japanese Prime Minister Shinzo Abe's coalition cruised to a big election win on Sunday, ensuring he will stick to reflationary economic policies and a muscular security stance, but record low turnout pointed to broad dissatisfaction with his performance.

NHK public TV said Abe's Liberal Democratic Party and junior partner the Komeito party were assured more than the 317 seats in the 475-member lower house required to maintain a two-thirds "super-majority" that smooths parliamentary business.

But the LDP was set to fall slightly short of the 295 it held before the poll, NHK figures showed.

"I believe the public approved of two years of our 'Abenomics' policies," Abe said in a televised interview. "But that doesn't mean we can be complacent."

Many voters, doubtful of both the premier's "Abenomics" strategy to end deflation and generate growth and the opposition's ability to do any better, stayed at home.

This Reuters news item, filed from Tokyo, appeared on their website at 11:59 a.m. EST on Monday---and I thank Orlando, Florida reader Dennis Mong for digging it up on our behalf.

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Gold extends drop with silver before fed monetary policy meeting

Gold futures posted the longest slump in five weeks on concern that the Federal Reserve is moving closer to raising U.S. interest rates, crimping demand for the precious metal as an alternative investment.

In the third quarter, gold fell 8.4 percent as the U.S. economy gained. The Fed begins a two-day meeting tomorrow and policy makers will debate the pace of raising borrowing costs after holding its benchmark rate close to zero percent since 2008.

Last month, gold dropped to a four-year low as equities surged to a record and oil prices entered a bear market. Jeffrey Currie, head of commodity research at Goldman Sachs Group Inc, said last week that the metal will drop as the U.S. economy improves. Economists and Fed officials surveyed by Bloomberg expect higher rates in 2015.

“This week will be all about the Fed,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Some investors are waiting on the sidelines until they get a clearer picture from the Fed.”

I picked this Bloomberg story off the Sharps Pixley website at 3:20 a.m. EST on Monday morning, but it's obviously been 'reworked' since then, because along with a 12:55 p.m. MST dateline, it also sports a new headline that reads "Gold Prices Cap Longest Slump in Five Weeks on Fed Rate Outlook".

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2014 silver eagle sales break annual record at over 43 million

Silver Eagle sales in 2014 have already broken the 2013 annual record with a few weeks of sales still left to be counted. As of December 11, the U.S. Mint reported that 43.1 million silver eagles have been sold so far in 2014. This compares to the 42.7 million during all of 2013, which was the previous all-time record.

Investor demand for silver clearly remains strong and people are taking advantage of discount prices. Why not? It isn’t too often that you can purchase an end product for less than the cost to produce it.  Many miners are unprofitable at current silver prices as their all-in cost of production is closer to $20. I believe this is an excellent time to take advantage of the paper games that have pushed prices to such absurd lows. Silver at under $20 per ounce is not likely to last long.

Yes, dear reader, it's another record year for U.S. silver eagles sales which I mentioned in my column last week.  But ignored in this article is the blatant fact that the retail silver investor in silver is M.I,A. for all types of silver bullion---and silver eagles sales this year and last are only a fraction of what they were in 2011 and the first part of 2012.  A phone call to your friendly local bullion dealer will reveal that fact---something that this so-called 'silver analyst' obviously hasn't done.  I'm in a position to talk to some of the biggest bullion wholesalers in North America on a weekly basis---and the story is the same.  It's the one or two big buyers that Ted has been talking about for the last two years now that have vacuuming up all the silver eagles---and silver maple leafs.

As Mark Twain was quoted as saying---"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so."  This is a case in point---along with most of what else you read from the rest of the lunatic fringe.

This silver-related 'story' appeared on the Internet site on Sunday---and it's courtesy of reader M.A.

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Casey Research: Russian Bear—or Gold Bull?

Last week oil was down, emerging markets were down, Wall Street was down—even the US dollar was down… but gold was up. That’s just the latest fluctuation, so, as encouraging as it is for us, we’ll wait for our favorite metal to show some real strength before getting too excited.

Meanwhile, the warm feelings gold bugs were celebrating got doused by news of Russia selling off its gold reserves as a response to its economic difficulties. But is it true?

Fortunately, we have fluent Russian speakers on staff here, so we were able to go to the source, and we’ve got the straight facts for you.

Yet another reminder that there is no substitute for careful thought and due diligence in all business matters.

Late last week several readers sent me this news item about Russia selling some of its gold, but it never appeared in my column because I was informed right away that it was bogus.  This commentary by Casey Research's own Laurynas Vegys appeared in yesterday's edition of the Casey Daily Dispatch---and it's worth reading.

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Johnson Matthey sells Gold and Silver Refining business for £118 million

Johnson Matthey announces that it has agreed to divest its Gold and Silver Refining business to Asahi Holdings, Inc., a collector, refiner and recycler of precious and rare metals from waste materials, for £118 million (US$186 million) in cash, subject to typical post-closing adjustments. The transaction is expected to be completed by the end of March 2015.

Johnson Matthey’s Gold and Silver Refining business is a refiner of primary and secondary gold and silver materials. It serves customers globally from refineries in Salt Lake City, USA and Brampton, Canada. The business also provides investment casting services from its St Catharines facility in Canada. In total, the business employs approximately 340 people.

In the financial year ended 31 March 2014 the Gold and Silver Refining business had sales excluding the value of precious metals (sales) of £44 million and for the six months ended 30 September 2014, its sales were £19 million. Its return on sales is typically around 25%.

This precious metal related story appeared on the Internet site yesterday---and I found it on the Sharps Pixley website.

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Koos Jansen: Why Austria is likely to repatriate its gold from London

Bullion Star market analyst and GATA consultant Koos Jansen writes that the Austrian central bank's gradual reduction of the unallocated portion of its gold reserves at the Bank of England in London indicates that Austria is serious about repatriating its foreign-vaulted gold.

Jansen's commentary is headlined "Why Austria Is Likely to Repatriate Its Gold from London" and it was posted on the Singapore-based Internet site on Saturday---and I found it on the Internet site.

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Swiss gold exports to India near Rs 1 trillion in 2014

Amid concerns of bullion trade being used for routing of black money, Switzerland's gold exports to India have risen further and is fast approaching Rs 1 trillion mark for the entire 2014.

The Swiss gold exports to India stood at over 2.8 billion Swiss francs (over Rs 18,000 crore) in October, up from about 2.2 billion Swiss francs in the previous month, shows the latest data from the Swiss Customs Administration.

This has taken the total Swiss gold exports to India since January this year to 14.2 billion Swiss francs (nearly Rs 93,000 crore), as per the data compiled by Switzerland's cross-border trade monitoring agency.

This surge in gold shipments has made India the largest destination for the yellow metal exports from Switzerland.

This longish article, co-filed from Berne and New Delhi, showed up on The Times of India website at 7:34 p.m. IST on their Sunday evening---and it's courtesy of Manitoba reader U.M.  It's worth reading.

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Indian gold imports in November close to 150 tonnes

India’s imports of gold surged in November to 145-150 tonnes, according to the latest statistics from the Indian Ministry of Commerce and Industry.

The ministry valued gold imports last month at $5.6 billion, which at the average spot price of $1,177 per ounce equates to around 148 tonnes. Imports hit 150 tonnes in October after 120-130 tonnes in September, 71 tonnes in August and 48 tonnes in July, when importers stepped up their efforts to meet the typical increase in demand from the Hindu festival season.

Imports surged on news that the Reserve Bank of India was reviewing import curbs that were introduced last year to counteract the country’s ballooning current account deficit. Towards the end of November, however, the RBI surprised markets by abolishing the rule that made it mandatory to export 20 percent of all imported gold, known as the 80:20 rule.

This short article appeared on the website at 2:50 p.m. GMT yesterday---and it's another gold-related news item I found on the Sharps Pixley Internet site.  It's a must read.

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3 Kerala companies have more gold than Sweden, Singapore, Australia

Three gold loan companies in Kerala have more precious metal in their vaults than the gold reserves of some of the richest nations. Muthoot Finance, Manappuram Finance and Muthoot Fincorp jointly hold nearly 200 tonnes of gold jewellery, which is higher than the gold reserves of Singapore, Sweden or Australia.

India accounts for approximately 30% of the global demand for gold, a true-and-tested source of insurance for millions of families that have little access to other forms of social security. What is true for India is even more so for Kerala, where 2 lakh people are employed in the gold industry. The metal's fungibility makes it an ideal collateral for over-the-counter loans.

Muthoot Finance holds 116 tonnes of gold as security for its loans, Manappuram Finance has 40 tonnes and Muthoot Fincorp, 39 tonnes. The trio's combined holdings are 195 tonnes. To put things in global perspective, Singapore's gold reserves are 127 tonnes, Sweden's 126 tonnes, South Africa's 125 tonnes and Mexico's 123 tonnes.

This gold-related article, filed from Kochi, was posted on The Times of India website at 2:06 a.m. India Standard Time [IST] on Sunday.  It's another contribution from reader U.M.

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'Dama' investors suffer heavy blow as gold frenzy subsides

Jewelry shops in Shuibei in Shenzhen's Lohu district have seen a drastic reduction in custom, as the local gold market is experiencing a chill, similar to the cold front sweeping the region.

Local jewelry shops report that their sales have plunged 40%-50% this year, according to Chinese-language Shanghai Securities News.

The status of jewelry vendors in Shuibei mirrors the situation of China's gold and jewelry market as a whole, as the region is the largest jewelry trading center in the nation, boasting four large-scale jewelry wholesale marketplaces and 4,000 jewelry firms, on top of over 2,000 small businesses, employing over 130,000 people, forming a complete industrial chain which covers processing, production, management, wholesale and retail.

Shuibei racks up jewelry processing value of 80 billion yuan (US$12.9 billion) a year, for a nationwide market share of just over 70%, accounting for 80%-90% of the nation's total transaction volume in gold/platinum and jewels.

Zhao Bin, general manager of a local jewelry company, said that the company's sales of gold-related products have slumped 60% this year, notably investment-oriented products, such as gold coins and gold bars, according to Shanghai Securities News.

This story put in an appearance on the Internet site at 9:04 a.m. Beijing time on their Monday morning---and it's the final offering of the day from reader U.M., for which I thank her.

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Robert Ringer: Dollar Collapse Is Inevitable, So Buy Gold

Last month, Kitco News interviewed renowned New York Times Bestselling author Robert Ringer. They began by discussing the current political direction of America, but moved on to the collapse of the dollar. While Ringer will not put a timeline on the collapse of America’s currency, he is certain that it will fall apart.

What will that collapse look like? Again, Ringer wouldn’t say, but he does have just one piece of advice for everyone: buy gold. Buy physical gold. In fact, he is even more aggressive in his allocation than our Chairman Peter Schiff. Ringer believes 50% of your portfolio should be in gold!

I found this gold-related news item on The Telegraph's Finance webpage late last night when I was looking for something else.  The link led to the Internet site.  There's a 6:12 video clip, plus a transcript.

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